India is Not an Investment Haven

Decades old investment treaty with foreign governments was scrapped last year by the Modi government. The new treaty, which is offered by the Modi government to foreign investors, is having terms and conditions that give no protection to foreign investors, which is the reason why they are now reluctant to enter the Indian market: Negotiators from countries including Australia, Iran and the European Union have told the Indian side that investors are waiting to come in but the new treaty terms give too little protection, the source said. Foremost among their concerns are a requirement for investors to fight any case in the Indian courts for at least five years before going for international arbitration.

The first requirement of any investment decision is that the return must be safe for the investors i.e., protection of property rights of the investors. This is only possible in a place where private property rights are respected and protected. India is not that place. No wonder investors are reluctant to enter the Indian market. In a condition were real returns on most investments in India are either zero or negative, putting such onerous conditions in front of the foreign investors is nonsensical. Putting a condition of fighting cases in the Indian courts, which are highly inefficient and unjust, is a sure way to guarantee that no investors invest in India. One thing that any investor hates is future uncertainty. A condition of fighting any dispute in Indian courts heightens uncertainty for investors. In such uncertain environment no one will want to invest in India. All these in the end means the Indian economy is heading in a dark abyss.

Mises India

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